Carmax Inc (NYSE:KMX) stock rose 5.89% (As on June 20, 11:30:33 AM UTC-4, Source: Google Finance) after the company reported first-quarter earnings that easily topped Wall Street expectations, driven by higher sales volumes and strong profit margins. Retail used vehicle unit sales increased 9% YoY to 230,210, with comparable store sales up 8.1%. Total gross profit climbed 12.8% to $893.6 million, helped by record high gross profit per retail used unit of $2,407. Wholesale vehicle gross profit decreased 0.4% versus the prior year’s first quarter. Gross profit per unit was historically strong at $1,047, though a decrease of $17 from the prior year’s first quarter. The company’s strong performance came despite ongoing economic uncertainty.
Moreover, the company has expanded CarMax Auto Finance (CAF) non-prime funding program, which we expect to provide significant flexibility in supporting CAF’s full spectrum penetration growth plans while mitigating risk. CarMax Auto Finance (CAF) income decreased 3.6% to $141.7 million as higher provisions for loan losses offset growth in CAF’s net interest margin. This quarter’s provision for loan losses was $101.7 million compared to $81.2 million in the prior year’s first quarter, driven by loss performance among 2022 and 2023 vintages and economic uncertainty.
In addition, the company bought 336,000 vehicles from consumers and dealers during the quarter ending May 31, a year-over-year increase of 7.2%. However, CarMax said that the average selling price for used vehicles was $26,120, down 1.5% from a year before. The prior quarter saw a year-over increase in the average selling price for used vehicles. Net income for the quarter rose to $210.4 million from $152.4 million, in the prior year’s comparable quarter.
KMX in the first quarter of FY26 has reported the adjusted earnings per share of $1.38, beating the analysts’ estimates for the adjusted earnings per share of $1.19. The company had reported the adjusted revenue growth of 6.1 percent to $7.55 billion in the first quarter of FY26, beating the analysts’ estimates for revenue of $7.54 billion. The company’s comparable-store sales, or sales at stores open at least 14 months, rose 8.1%, beating the FactSet consensus estimate of a 6.1% increase. During the first quarter of fiscal 2026, the company has opened two new stand-alone reconditioning/auction centers.
Additionally, CarMax accelerated its share repurchase program, buying back $199.8 million worth of stock during the quarter. The company had $1.74 billion remaining on its repurchase authorization as of May 31.